Russia

In May-July, 1999, I traveled to Russia to study the possibility of a development project in Tomsk oblast. In August 1999, I submitted a recommendation to President Clinton on the basis of

Tomsk’s self-directed movement toward market reform and development

Tomsk’s movement toward democratic development

Best communication infrastructure in Siberia. Tomsk was the main communications node between the Urals and Vladivostok.

Nascent small business/enterprise sector primarily in need of small amounts of seed funding for start-ups, and expansion of existing small businesses.

Abundant natural resources

The basic ingredients existed that I thought were needed for an economic resurrection. The population of 600 thousand people were generally very well-educated among six universities in the city. Internet was available, but limited to a 1 MB link that was parceled out and distributed among universities, businesses, and citizens. Government was largely reform-oriented towards democracy and market economy. Tomsk was the primary telecommunications node between Moscow and Vladivostok, making it an ideal location for replicating successful project components. Small businesses were beginning to flourish despite severe financial constraints following the financial collapse of August 1998.

There were also critical food shortages in the region, children living on the streets because they considered orphanages intolerable, women having to resort to prostitution to feed their children, and a near-total lack of new economic opportunities. Economic opportunities for women were routinely negotiated in bed, if at all.

After returning to the US, I spent most of the August 1999 reviewing notes and writing them up into a proposal with three key ingredients:

a community development bank to provide financing to would-be entrepreneurs to create their own business, without need for material collateral because almost no one had that collateral aside from mafia, who just took what they wanted;

emergency food relief

assistance to children in or out of orphanages.

I sent the proposal to President Clinton, who had been an unswerving ally in prior efforts (accounting for POW/MIAs missing in Southeast Asia.) I asked him to refer it on to appropriate US agencies if he found it worth considering. Tomsk was awarded the fourth and final USAID Regional Initiative in Russia three months later in December 1999. That initiative encompassed the three critical objectives I had outlined, along with 34 other components. The result was the Russia/US Regional Initiative in Tomsk oblast. US Russia Business Council wrote it up as follows:

Source: US Russia Business Council (2001)

In December 1999, as a result of the region’s efforts for economic development, Tomsk Oblast became one of the four focal points of interest for the Regional Initiative (RI) program. The RI is a U.S. Government-funded program aimed at promoting democratic and market reform in Russia by helping to create successful models of economic and political development at the regional level. This was the first expansion of the RI in more than two years, since Samara was announced as the third RI region in September 1997.

Daniel Rosenblum, Special Advisor for Economic Programs at the Office of the Coordinator of Assistance to the NIS explained that Tomsk was chosen due to its reform-oriented political leadership, its active small business sector, its high level of democratic development, and its strong potential as a “disseminator” of RI experience to other regions. Tomsk Oblast Governor Viktor Kress currently serves as chairman of the “Siberian Accord” regional economic association, as well as chairing the Accordís committee on small business.

First Secretary of the U.S. Embassy in Moscow Mara Tekach-Ball led a U.S. delegation visit to Tomsk in early February of this year. The delegation met with Governor Kress, Oblast Administration officials and representatives of the private sector. All parties agreed that the U.S. assistance provided to the Tomsk region under the RI should concentrate on the following issues:

1. Small business development
2. Civil society
3. Anti-corruption activities
4. Creation of a favorable investment climate
5. Increasing links to the rest of the world
6. Social sector
7. Energy efficiency and nuclear conversion

Another result of the oblastís efforts to attract investment — on March 17 of this year, Gazprom, Tomskgazprom and Germanyís Wintershall AG, signed an agreement on joint development of oil and gas fields (Ostaninsky and Kazansky tracts, and Urmanskoe and Archinskoe fields). Furthermore, these companies will seek additional licenses for geological exploration and extraction of hydrocarbons in this region.

The Tomsk Oblast is located in the southeast part of the West Siberian Plain and occupies about 317 thousand kilometers. Nearly all of its territory is in the zone of dense forests (ëtaigaí). The climate is continental, with long, severe winters and short, hot summers. The neighboring administrative areas are Omsk, Novosibirsk, Kemerovo, Tumen Oblast, the Khanty-Mansy and the Krasnoyarsk territories.

The Tomsk Oblast has recently captured the attention of Western investors. The region is characterized by a unique combination of natural and intellectual resources in addition to the regional administrationís commitment to economic and social development. The oblastís natural environment is dominated by the Siberian cedar forests and contains reserves of other natural resources, including:

WOOD: The total forested area is over 20 million hectares or 63 percent of the territory of the Tomsk Oblast.

WATER RESOURCES: There are eight navigable rivers in the Tomsk Oblast: Ob, Tom, Tchulum, Ket, Tym, Tchaya, Parabel and Vasyugan. The water basins occupy approximately two percent of the territory. There are also underground reservoirs of mineral drinking water and several thermal springs.

MINERAL WEALTH: Tomsk has extensive reserves of iron and titanium ores, as well as an estimated 110 billion tons of Bakchar iron. There are also deposits of zircon-ilmenite, rare-earth minerals, silicate and quartz.

HUMAN RESOURCES: Tomsk boasts six universities, including Tomsk State, which are widely considered among the finest regional universities on the Russian territory. Furthermore, Tomskís universities appear to be a major factor in explaining the regionís private sector, effective NGO community, and large number of active independent media outlets.

The Russia/US Regional Initiative in Tomsk ran from January 2001 to December 2005. The Tomsk Microfinance Bank, a key component recommended and requested by P-CED, remains in operation and has been fully self-sufficient and profitable since 2003. To date, more than fifteen thousand loans have supported the creation of thousands of new businesses. More than 80% of loans went to women.

I returned in April 2000 on invitation from Institute for Optical Monitoring, Tomsk Akademgorodok (Academic city). The main objective was to directly assist former weapons scientists in converting their skills to peacetime business endeavors. This was written up in the Tomsk Regional Business Review.